THE print and packaging group, Clondalkin, has become the first Irish public company to be censured by both the Dublin and London Stock Exchanges.
Yesterday, in a strongly worded statement, the two Stock Exchanges rebuked Clondalkin for publishing a document relating to its £58 million acquisition of the Dutch group Van der Windt. This was because it omitted what the exchange deemed key financial information on the Dutch company.
In its statement, the Stock Exchange said Clondalkin was aware that its document to shareholders "omitted financial information required by the exchange's Listings Department, but still went ahead and circulated the document to its shareholders.
Responding to the Stock Exchange's censure, Clondalkin chief executive Henry Lund told The Irish Times: "We were under commercial pressure to complete the deal, the seller wasn't going to hang around. We felt that it was in the best interests of shareholders that the deal should be done, but it's regrettable that we didn't comply with all the bureaucratic requirements. Our document was 99 per cent compliant."
In a formal statement, Clondalkin maintained that its circular on the Man der Windt acquisition "accurately states the facts and did not mislead shareholders regarding the merits of the transaction".
Clondalkin was later forced to issue a letter to its shareholders which contained the absent financial information on Van der Windt - an accountant's report for 1993 in respect of the acquisition and a cash flow and applications of funds statement for the same year.
The Stock Exchange described Clondalkin's breach of its Rule 14.2 as "very serious" and publicly censured the company.
"Clondalkin's shareholders who read the circular before Clondalkin's correcting letter dated 14th June, 1996, would have been entitled to believe that the circular had been approved by the Stock Exchange and would thus contain all the material which under the Listing Rules the Stock Exchange believed was necessary. It did not and Clondalkin knew it did not.
"It is in the committee's view unacceptable for issuers to disregard the Listing Rules on the basis that they either disagree with the Stock Exchange's views or to proceed with posting a circular without the Stock Exchange's approval because they consider that they are under commercial pressure to do so," the statement from the London exchange said.
The statement from the Irish Stock Exchange on the censure was brief, but the London Stock Exchange went into detail on the affair.
According to the LSE, Clondalkin submitted its first proof of the Vander Windt circular to the exchange's Listings Department on April 22nd. Four days later, Clondalkin was told that the circular should include details of Van der Windt's 1993 figures band cash flow. On May 9th, Clondalkin wrote to the Stock Exchange describing why this information should not be included in the circular. A day later, the LSE told Clondalkin that the 1993 information should be included.
The last contact between the Listings Department of the LSE and Clondalkin was on May 14th when the exchange reiterated its demands that the 1993 information on Van der Windt be included in the circular. On May 31st, Clondalkin posted the circular to its shareholders minus the 1993 information required by the LSE.
Two weeks later, after a meeting with the Listings Department, Clondalkin was forced to issue a further one page circular to shareholders which contained the required 1993 financial information.
"In the committee's view, Clondalkin had no proper grounds for failing to obtain approval of the circular prior to its posting to shareholders. Clondalkin had sufficient time between the first time that the Listing Department's view were first communicated to it and the date the circular was posted, to resolve the accounting issues," the LSE said.
